ResGen’s first coal supply contract also bundles in an equity arrangement.
ICM will subscribe to $10.5 million of ResGen’s shares at an issue price of 57.5c, giving the Indian company a 10% stake in the explorer.
Under the offtake agreement, ICM will buy 1 million tonnes per annum for the first three years of production and 2Mtpa for the next 17 years.
“This is a major step in our plan to establish our Boikarabelo mine as a significant supplier of coal to both export and South African domestic markets,” ResGen managing director Paul Jury said.
The Boikarabelo tenements in the Waterberg coal region have probable saleable reserves of 603 million tonnes, an indicated resource of 570Mt and an inferred resource of 1.7 billion tonnes.
The explorer aims to receive government mining approval by early 2011 and to start open cut thermal coal production in early 2013.
Shares in the company are up 7c (11.7%) this morning to 67c.